Ladies and gentlemen, good day and welcome to the GTPL Hathway's Q1 FY 2023 earnings conference call hosted by Emkay Global Financial Services. As a reminder, participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. If you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone. Please note that this conference is being recorded. I now hand over the conference to Mr. Pulkit Chawla of Emkay Global Financial Services. Thank you and over to you, sir.
Thank you, Michelle. A very good evening, everyone. I would like to welcome the management and thank them for this opportunity. We have with us today Mr. Anirudhsinh Jadeja, Promoter and Managing Director, Mr. Rajan Gupta, Chairman and Non-Executive Director, Mr. Piyush Pankaj, Business Head, CATV and Chief Strategy Officer, and Mr. Anil Bothra, Chief Financial Officer. I shall now hand over the call to the management for the opening remarks. Over to you, gentlemen.
Thank you, Pulkit. Thanks. Good evening, everyone. I welcome you to our quarter one FY 2023 earnings conference call. At the outset, I would like to express my gratitude to our stakeholder for being part of this growth journey. GTPL Hathway has begun financial year 2023 on positive note with consistent performance in digital TV and robust growth in broadband subscription revenue and ACB. We continue to explore our opportunity to expand our footprint throughout India and consolidate our presence in existing market by leveraging our digital infrastructure and capability and building on the trust of customers by providing them enhanced service and product quality. With that, I hand over to Mr. Piyush Pankaj, who will take you through the business and financial aspects of the company.
Thank you, Mr. Jadeja. Good evening, everyone. I hope all of you are safe and healthy. I am pleased to announce the business and financial performance of GTPL Hathway, the largest MSO in India. GTPL Hathway is a consistently profit-making digital cable TV and broadband company in India, creating value for its stakeholder over past six years with a growth of digital cable TV subscribers by 2.3x and broadband subscriber base by 4.8x. We are a dividend-paying company from last six years and maintaining our net debt- free status. Our ranking in Dun & Bradstreet's India's top 500 companies for 2022 as per net profit has improved by 60 places to number 364 as compared to the 2021 listing.
Our CATV active subscriber base as of 30th June 2022 stands at 8.4 million and paying subscribers at 7.8 million. On YoY basis, the increase in active and paying CATV subscribers is 400,000 and 500,000, respectively. GTPL will continue to look at inorganic opportunities to augment its presence in existing and new markets. In the broadband business, we added 155,000 net subscribers on a YoY basis and 29,000 net subscribers on a QoQ basis. Home pass stood at 4.85 million as on 30th June 2022, an addition of 750,000 YoY. ARPU stood at INR 450. The average data consumption per customer stands at 260 GB per month per customer, an increase of 17% from last year. Moving on to the financial performance.
On a consolidated level, excluding EPC contract, in quarter one FY 2023, revenue grew by 10% YoY to INR 6,454 million. The CATV subscription revenue stood at INR 2,727 million, up by 3% YoY. The broadband segment delivered robust growth of 24% YoY, and the revenue stands at INR 1,139 million, led by healthy subscriber additions. Consolidated EBITDA for the quarter stood at INR 1,354 million with a margin of 21%, which have witnessed a marginal decrease YoY on account of depleting deferred activation revenue and one-time non-recurring expenses due to change in policy of provisions. PAT for the quarter stood at INR 433 million.
On a standalone basis, excluding EPC contract, during quarter one FY 2023, the company's revenue grew by 9% YoY to INR 4,079 million. The company reported EBITDA of INR 753 million and CapEx of INR 274 million. Thank you everyone for your attention. We can now begin with question and answer session.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star then one on their touchtone phone. If you wish to remove yourself from the question queue, you may press star then two. Participants are requested to use handsets while asking a question.
Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of [Amita] from Sera Capital. Please go ahead.
There are more than 20 parties in the conference.
Hi. Am I audible?
Yes, sir. You are audible. Please go ahead.
See, I have only one or two questions. My first question is that, you know, why our broadband number of subscribers are not increasing. I mean, in this quarter also we have seen 29,000 only. My original hypothesis, you know, was that, you know, if we have 8.4 million, that is 84 lakh cable TV subscribers and by changing the set-top box to hybrid and, you know, digital set-top box, et cetera, we can convert most of them to broadband. So, effectively, you know, our quarterly numbers should be much, much higher. Now in the last year, in successive conference calls, I heard that, you know, the management was telling that because of COVID, we could not do those tie-ups and all those stuff.
Now that, you know, the tie-ups are happening, the JVs are happening, and local JVs, et cetera, so why these numbers are not increasing?
Yeah, Amita. First I will take on the broadband side, then on the hybrid box side. In the broadband, if I go for the gross additions, gross additions are still increasing. We are seeing that this quarter also the broad additions is more than what we have taken last quarter or last to last quarter. Yes, as you know, the COVID has affected the people who have adopted for the work from home or education from home, they all are going back to the offices and schools. We are seeing some of those customers who are shifting and they are going. Hence, some of the customers are shifting to their main base for the work. Some are shifting as the schools have started.
Those things have been affected in this quarter, which we have seen that the gross addition has increased, but the net addition is still at the same range as we were doing it in the last two quarters. We are very hopeful that as we know that broadband is a nascent industry and a lot of potential is there, which we are doing, and we are hopeful and we are confident that the numbers additions will increase as it was an earlier trend and as we have been expecting in the projections on that basis.
Coming to your other question that, the adaptability that we have introduced to the hybrid box, we have so much cable homes, and those homes should convert into the broadband. You are right on that. We have started as you know that we are doing the B2C mainly in Gujarat and six other cities, and we are adopting to the B2B conversions for the broadband also to expand our footprint. That business has taken off very well. Lot of signing has already happened, which you will start seeing the numbers coming in quarter two, quarter three, and quarter four. So we are confident that the numbers will increase in the coming quarters.
Any guidance on that? I mean, for example, our 29,000 will become a lakh in, you know, quarters, per quarters, something like that. You are having some projections?
Because I can't give the future growth level and all on this call. Yes, we are expecting that the growth will be there. The good growth will be there. Yeah, I can't give you the exact number, the exact projection from this call. We can connect one to one, and we can do something with that.
My last question would be that, you know, you had some problem you were facing on the hybrid box level, especially, you know, when you were changing the channels, et cetera, the delay, et cetera. That all those things have been sorted out now?
Yeah, yeah. Those all things have been sorted out. That's one of the factors for delaying our launch by around one and a half months. All those factors has been sorted out, and now the response and the quality and everything is very good. Customers are happy with the performance.
Okay.
This is Rajan Gupta here. I request you should meet gentlemen separately and also make sure there are no misunderstanding there on.
Yeah.
On that hybrid box ability to convert consumer from a cable to broadband consumer.
Yeah.
There seems to be some conceptual understanding gaps. Let's make sure that is clear. You know?
Yeah.
Otherwise, next call also same thing will happen. There is absolutely no connection of launching hybrid box with the increase in broadband customers or any automatic increase in broadband customers.
Yeah.
Make sure that network understanding is there.
That's it. Just to clarify once again, hybrid box is the box which convert your non-smart TV into a smart TV, and it gives the capability in the box of giving the CATV and OTT together as a combo. It can work on any broadband, whether it is GTPL broadband or any other third- party broadband, this box will work on that. Just to give the clarity.
Yeah, that I understand, but thank you for clarifying anyway.
Yeah. Thank you.
Thanks.
Thank you.
Thank you. The next question is from the line of Shailendra M. from Veba Financials. Please go ahead.
Hi. Thank you for taking my call. First of all, I want to congratulate you for sustaining the performance. On a YoY basis, the performance looks quite encouraging, but on a quarter-over-quarter basis, it's kind of flat. That's okay. I'm happy to note that you are optimistic about growing in near future. I just wanted to understand what is the response to this, GTPL Genie new set-top box and you know, how, f orget about the broadband part, h ow will it help you to convert some of the standard cable customers into this? And there is a second question which is, you know, when your depreciation numbers are quite high, so these are real depreciations or, you know, they are accelerated depreciation? There are two questions.
Thank you, Shailendra. You're right that quarter four to quarter one is flat and if you see from YoY basis, the growth is there. As you know that as we have appointed Deloitte as the statutory auditors of the company, the provision policy has been made consistent with GTPL group and revenue streams . One-time provisions have been taken in quarter one of 2023, which is part of other operating admin and selling expenses. That's why you are seeing the flat results in quarter in comparison to QoQ.
How much are those provisions? Can you please say? Which we may not expect in futures. How much is the quantum?
Yeah. It's around INR 5 crore which is there.
Okay.
Which we are not expecting in the future. On the Genie box, the initial customer response is very favorable, and we have seen surge in hybrid STB inquiries. Being a new product, the initial response and consumer adaptability is moderate, and that is owing to larger validity packs of six and 12 months. Giving all the major OTT apps, we are giving the 15 apps in the offering. As many customers have already subscribed to some OTT apps, we just got the feedback that they want to go for hybrid upon completion of their existing subscription period now. Based on the market feedback, we would be coming up with lower validity packs and introduce small bundles of OTT apps to cater larger customer demands better.
Further, we also plan to offer the OTT bundles to our broadband customers and existing cable TV customers in their regular subscription plan. This would enable us to expand our horizon in terms of customer base for OTT offering and customer stickiness. During the quarter, we have seeded around 5,000 hybrid STBs till date, and we are looking forward that as we will make it more attractive for the consumer in the coming days, the more adoption will happen towards the GTPL Genie boxes. What was the other question?
Depreciation.
On the accelerated depreciation. Shailendra , can you repeat the last question on the accelerated depreciation, if you can?
You know, just wanted to understand, your depreciation is quite high. Is it basically the set- tops, whatever you're providing for your cost, you are depreciating that? You know, what is the policy and, you know, can we add that depreciation back to the cash flow? Is it a non-cash item or it's actually a real depreciation, it has to be written off? I needed to understand that.
As you know that, we have procured our hybrid boxes last year only, but the capitalization of those boxes have started in this quarter. That is correct. Already the cash, you can say that the cash has not happened. It is more of an accounting policy that the depreciation has started coming from this quarter.
Okay. These are basically your set-top boxes you are depreciating, right?
That's right.
How much do you spend annually on, you know, let's say quarterly on set-top boxes?
Currently, as we have given in earlier call also that, the total CapEx, we are looking forward for around INR 450 crore in this financial year. Out of that, right now we may be spending around INR 86 crore. INR 46 crore is in the broadband and INR 44 crore is attributable to the cable TV, currently. On cable TV, I will say around 90% CapEx goes into the set- top box.
Okay. It's approximately INR 35 crore, INR 39 crore, something like that on set-top boxes?
Yeah.
That's on for the quarter.
Yeah. That's for the quarter.
Over how many years do you depreciate the set-top boxes?
As a depreciation policy, which is going on from the long, it is eight years.
Eight years. Is it approximately 12.5% straight line basis or is it based on volume output?
This is on a straight- line basis.
Okay. Thank you.
Thank you. The next question is from the line of Arjun Shah, an individual investor. Please go ahead.
Yeah. Hi, sir. Congratulations on a good quarter. I just wanted to talk a little bit about NTO that is going to be rolled out soon. I think the industry generally, particularly the broadcasters have been quite pessimistic about the whole thing, and I think our team has been quite optimistic. Is it because of the revenue split between the LCO broadcasters and us changing or what is the nature behind the optimism, is what I'm trying to get at, sir.
Rajan, sir, will you take this question, please?
Can you repeat the question, please?
Uh.
He's talking about the implementation on LCO and what is going to be. How is this going to be favorable for us or MSOs or broadcasters and what is the split and how we look forward of this as GTPL.
No, essentially, as of now, I think contours are still taking shape, so I don't think so. You know, we are into implementation phase. You know, current deadline is for December for implementation. I think as of now we are neutral about that. As of now we remain neutral and you know, wherever possible, anyway ARPU increase opportunity we are trying. From an NTO perspective, as of now we are neutral.
Okay. Fair enough. I think there were questions about this as well. On the cable TV front, we saw margins shrinking a bit this quarter. Do you expect this to continue in the future or is it also got to do with depreciation, I assume, but other factors as well I think you took provision? Is there anything else that we should keep an eye on?
Arjun, I always remind myself that whenever you're seeing the cable business margin, you have to net the pay channel and the carriage and the placement income. On that basis, if you see the margins, we are at the same margin. We have not reduced on the margin side. Yes, as you know that as the pay channel increases, our placement and our carriage income also increases. On that basis our denominator increases. The net, if you do the net of that, you will find that our margins are same.
Understood.
We are expecting that, from here onwards the margin will improve. Margin should improve.
Understood. Thank you, sir.
Thank you. The next question is from the line of Hardik Jain from ISJ Securities. Please go ahead.
Hello. Hello, can you hear me?
Yes.
Yeah, yeah.
Hardik Jain.
Yeah. Hi. Thank you for the opportunity. Like, the question was asked before also, I just want to repeat it. We have around 30,000, we added around 39,000 broadband customers this quarter. I don't want you to give us a guidance, but if you can share this, what is your aspiration? How many customers? How are you preparing the organization? How many customers as an organization you want to reach in broadband, say in next three years from, say, 8 lakh odd numbers today? Do we see ourselves reaching 15 lakh, 20 lakh customers in next three to four years?
Yeah, Hardik, we are, as you know that, from last five years when we did the IPO, we are at around 200,000, and we have grown around 4x in the last five years. We want to do the additions on the same level or increased level of that. That's the endeavor on which company is working. This quarter, we have maintained that, as I already explained, that the gross additions are happening. Gross additions are increasing. We are seeing that the gross additions are increasing. That's very encouraging for the management and for the company as we will see that where I have to adopt or you have to get out of that adoption that's already happened as the situations are.
What would have been the gross additions, sir, this quarter?
It's close to around 76,000 quarter.
Oh, that's nice.
Yeah. That way we are hopeful or we are confident that the additions numbers will be on the same trend as we are doing from last year.
Out of this 76,000, if you can bifurcate, say, Gujarat and non-Gujarat in this.
90% in Gujarat.
90% in Gujarat. Okay. Sir, one of our main cost item is bandwidth cost that we have to purchase bandwidth. I just wanted to understand, please pardon me for my ignorance. So whom do we purchase this bandwidth from, typically?
All telecom like even the Airtel, Vodafone, Reliance.
Okay.
Jio.
As our scale increases, do we have the benefit of scale in the sense that the per unit cost of this bandwidth decreases for us as we grow in size or it doesn't matter?
Rajan, sir, can you take this?
Yeah, Piyush. Essentially, I'll also put some light on the first question you asked, gentleman. In terms of growth potential aspect. You know, broadband consumer number growth is directly linked to home pass growth.
Okay.
Typically, what we are seeing in a competitive market, 20% penetration of home pass is what we are able to get.
Okay.
In an urban area. Because urban area typically you have three players competing, and, 60% of the market typically, is subscribing to broadband, so you're able to take 1/3. Typically 20% is what we are able to take in a metro kind of market. Of course, in a rural and semi-urban markets, penetrations are lower, but your market share is higher. Essentially 20% to home passes is what we are able to get.
Okay.
As we keep on investing in more and more home passes, like Gujarat itself, for example, there's no reason why Gujarat can't be in a 2 million market by itself on broadband basis.
Right.
I mean, we have done a project also some time back, which means that up to every panchayat , fiber is there. Okay. Only issue is that the whole home pass has to be created. Okay.
Right.
You know, fiber is a trunk line which is available, okay. But then whole home pass means consumer home has to be created. Okay.
Right.
I think this quarter we've done 1.5 lakh home passes, Piyush, if I'm correct. You know, we have to add more home passes. From a long-term perspective, as you mentioned, from a three to five year perspective, Gujarat itself can be a 2 million market because the way broadband demand in second level cities and third level cities is increasing. Essentially we are working model at a very low ARPU of INR 450 itself. You know, there's a very healthy EBITDA of greater than 40% we can deliver. Essentially model is very workable model. You will appreciate even in INR 450 ARPU, even in a semi-urban area or a C-level town, you know, affordability is there. We are talking about FTTH kind of high-speed broadband, unlimited data, that kind of price point.
It is a very profitable proposition. It's a matter of now we have to see how much cash flow we have and how much we can roll it out. That's the whole endeavor which management team is trying.
Right.
Coming to bandwidth, of course, there's a scalability. You know, as with scale increasing in, bandwidth cost can come down to as low as, you know, 8%-10%. There are companies where bandwidth cost with scale is reaching to as low as 8%-10% the revenue.
Okay. Yeah, that was my question. Thanks for answering.
Thank you. The next question is from the line of Parth Kotak from Alpha Plus Capital. Please go ahead.
Hi. Thanks for taking my question, sir. I have a couple of questions, and please, I would be sorry if I'm repeating one of the questions. CATV revenue, as we've seen the paying subscribers have increased and subscription revenue would have increased. I think our average revenue per customer on the digital cable business would have gone down. One, is that the right reading, and why is it so?
You're talking about the ARPU?
Yes, that's correct. ARPU on the digital cable business.
Yeah. ARPU in digital cable business in this quarter we have seen around INR 1 it has come down.
Okay.
Because of some of, you can say the market is reducing the higher side and brought it to the lower ARPU side. That will be get corrected within a quarter or two quarters.
Right. Perfect. It would be helpful.
Mr. Parth Kotak?
Yeah.
You are not audible. Can you please repeat your question?
Yes. Is this better?
Yeah, better.
It's better. Please proceed.
Thank you. Yeah, my question was if you could throw some light on your performance in newer geographies.
In newer geographies, we have entered into Madhya Pradesh, we have entered into the Northeast markets, Tamil Nadu. In the four or five markets we have entered, and there the progress are very well. Already in Tamil Nadu we have crossed half a million. In Northeast also we are entered into Manipur and Tripura and all, where already the numbers are increasing at a very good rate. Same is happening in the MP, and we are looking forward that we will enter into new geographies in the coming quarters.
That is very encouraging, sir. Sir, my last question is, our revenue from EPC contract is zero. Do we expect it to remain zero for the coming years, or how do we see it?
Yeah, this is a one-time contract which we did for the GFGNL, which is BharatNet project.
O&M.
We are O&M. The operation and maintenance of that network is still continuing, which is coming in as our operating revenue in our books. It's a general business because it is a seven-year contract which is shared with the Gujarat government, GFGNL. We are looking forward for this type of project as we have developed those capability and we want to enhance those capabilities. We are looking for the BharatNet type of projects in other states. Plus we are looking forward to other government projects, small or bigger, in Gujarat and smaller states also, other states also.
Okay. Thanks for answering all my questions. That's all from my side.
Thank you. The next question is from the line of Riya from Aequitas Investments. Please go ahead.
Good evening, sir. This is Pratiksha here. My first question is on cable TV. You mentioned that our gross addition was 76,000. How much of this would be basically, you know, a migration to Genie? And how much of this is inorganic growth? If you could give those numbers.
Hi, Pratiksha. Pratiksha, 76,000 gross addition is in the broadband which we have mentioned.
Okay. All right, so what about?
I've already given that, we have seeded around 5,000 hybrid boxes in this quarter.
Okay, 5,000 in this quarter. Okay. Do we have any other inorganic growth in cable TV front? Gross basis.
Those are in the pipeline. That will come into the next quarter. Other quarter.
Okay. Nothing for this quarter, right?
Nothing for this quarter.
Okay. The ARPU in cable TV for this quarter would be?
It's close to around INR 119.
Typically since you started deploying Genie, we would have expected our ARPU to go up because the unit economics are better than our normal set-top boxes. When can we expect to show in the numbers?
Yes, yes. It will go up with the time, Pratiksha. We are looking forward for that. That's why in the last question I said that all the corrections in the upside also will happen in quarter two onwards, yes. That's right.
Okay. On the CapEx front, you know, we have said the guidance for this year was INR 180- odd crore for cable TV. It's more or less similar to last year. Are we seeing any inflationary pressures in the cost pressures on our set-top box costing? Does that mean that we on our number of unit sales, we'll have lesser set-top boxes this year? Or how do I look at that?
No. No cost pressure on the set-top box side. Whatever pressure was there in the last year because of the chip availability, now no pressure is there right now.
Okay. If you could just, you know, elaborate a little bit on the churn that we are experiencing for the company as well as industry like, you know, what kind of churn ratios are we seeing?
As explained earlier that cable TV business has witnessed increased churn during COVID. After COVID, we have observed that there is a marginal arrest in that churn, but the same is still higher compared to the pre-COVID times.
Okay. All right. Thank you, sir.
Thank you. A reminder to all the participants, you can press star and one to ask a question. The next question is from the line of Bhupendra Tiwary from ICICI Direct. Please go ahead.
Good afternoon, sir. Thank you for giving me the opportunity of asking this question. I hope I'm audible. My question is more on the long-term perspective. If you look at the last two years, you know, subscription revenues has been flattish at INR 1,050 crore, INR 1,070-odd crore. Even if you look at the apps.
I'm sorry to interrupt, Mr. Bhupendra. I would request you to use your handset while asking your question. Your voice is not being.
Sure. Is it better?
It's much better. Please proceed.
Yeah, sure. My question is largely on the fact that if you look at the overall subscription revenues in last from 2021, 2022, it has been flattish at INR 1,050-INR 1,070- odd crore. Even if I look at the absolute EBITDA of the cable segment, that has been flattish. The heavy lifting of the EBITDA has been done by the broadband increment of INR 100- odd crore in last two years from 2020 to 2022. During this period itself, we have seen that you have gone from number two MSO to number one MSO, which kind of reflects that the industry itself has not been great. What I would ask you is, you know, for the next three years, how would you see this, you know, growth structure playing out? What segment will be heavy lifting?
We have also expanded to new cities. The kind of transmission that you would have seen, we should have expected to see in the subscription revenues or the absolute EBITDA of the cable that has not been very, very encouraging. How would this segment play out for the next three to five years? I'm not looking for perfect numbers, but some direction on how do you see this segment doing going ahead in the medium term.
Thanks. Thanks, Bhupendra. So I'll just give it on the revenue on EBITDA side. Then I think I will ask Rajan, sir, also to put the light on those on what we can do three years and all. See, last three years if you see on the EBITDA, mainly the EBITDA has impacted due to the activation revenue. The activation revenue which used to have INR 125 crore, INR 130 crore, which was because of the deferred revenue on there. The deferred revenue pile is coming down. Right. As you know, that's in the Ind-AS. When the Ind-AS started in 2016, you have to do the deferral of activation for five years. After NTO, as we have been allowed to do activation, some activation upfront, so that deferred revenue has gone down.
If you see this quarter also or from the last year also and from the last to last year also, mainly the impact which is there in the EBITDA is there because of the activation revenue. If you take out the activation revenue, you will see that the EBITDA has grown and the margins have grown and everything has happened on that way. I will request if you do the analysis on that basis, then you will get the correct picture on how the subscription revenue contribution is towards the EBITDA. Now, coming to the subscription revenue, over the last three years, if you see, there is a growth, a good growth in the subscription revenue also which has happened. The last two quarters you can say that we are going up.
The growth is around quarter-to-quarter 2%, 3%. We are expecting it to get corrected as now is the time to go for the inorganic growth of the company. Till date we are doing all these things organically, and we are looking forward that the revenue growth will start happening as it was happening around two years back, on that basis, before COVID, I can say. That's on the back. Next three years, Rajan sir, you want to take that one? How you are looking forward for the sector, for the both cable and the broadband standing out.
Sure, Piyush. I think you've given a good perspective the last two years. Essentially I think the task is clearly cut out for us. While with our industry serious headwinds, I think the task is now pretty much clear cut. We have to go back to what the consolidation journey with a consolidated industry. Okay. Still there are more than 1,000 MSOs and, which obviously increase a lot of competition. It's not very healthy from a market structure perspective. That task is very clear cut. Whether organic or inorganic, we have to consolidate industry. Okay. Finally, I think last two years because of COVID-led, pandemic-led circumstances, of course, you know, so much interest was there in the market, especially at the bottom of the pyramid, and which is where a lot of our cable base is there.
We couldn't increase ARPU. I think task is very clear cut for the management team that we have to now start focusing back on ARPU with the pandemic behind us. I think both the levers, A, use our leadership in many markets to increase ARPU and parallelly keep on consolidating market through both organic and inorganic. That's the direction I see for ourself for three years.
Yeah. Thanks for your answer, sir. One thing that we've been seeing that the low-hanging fruit for the cable segment was, you know, taking higher share from those LCOs. That has not played out. I think we've been waiting for a long time. I think that is one thing which one conversion could have kind of cleared the EBITDA and also set the background for the future also. That is something that one is waiting as an investor and as an analyst that covers, let's say.
No, no. Fair enough. I mean, I think the point is pretty much well- taken. Which is where I said the whole ARPU increase. You know, even from a LCO perspective, because LCOs have lost subs in pandemic, and which is where their existence kind of become questionable. In that situation, management team, you know, found it tough to increase ARPU. With pandemic behind us now, it's the right time .
Sure, sir. Thank you.
Thank you. The next question is from the line of Sanket from Kedia Securities. Please go ahead.
Am I audible?
You're audible. Please proceed.
Firstly, sorry for repeating the question. Just wanted a little bit clarification on my understanding. What would be the difference in between the gross addition and the net addition as you mentioned? And how will the home pass benefit the company, if you can throw some light around it.
Gross additions is the new sales, new customers which you are bringing into your network, which is the gross sale. We calculate net on the basis that the existing customer who is churning out from your system, that has to be netted out, and that's the growth we show as a net additions.
I'm sorry. I'm sorry, Mr. Sanket. We cannot hear you. There is a disturbance from your line. Could you please repeat?
Just what you had mentioned about that we should track increase in the home pass as one of the key metrics to evaluate the company going forward. How would that be material for us?
For increasing the subscriber base, you have to meet the capabilities, which is the home pass. The home pass is that you can serve those customers within 24-48 hours if the demand is there. It's like one building is 100 homes. I have made the home pass on that building. This means I can serve those 100 customers within 24 hours and provide the connections. That's the way you create the home pass. This is the capability creation for the company. On that capability creation, you convert them into your connected customers.
Sure. On the numbers, I just wanted to understand there has been a substantial increase in the other expenses if you look at the P&L, which is more than the quarter-on-quarter revenue growth. Where are we majorly spent on the other expenses?
On the other expenses, if you look at the other operating incomes, they are also increasing, and consequently their expenses are appearing in the other operating and administration selling expenses. If you take O&M costs, which is almost around INR 37 million, and there is one-time actually the impact of the provision for doubtful debts, which we have adopted the ELC provision on the placement receivables. That is actually appearing in other operating expenses.
Good. Thanks. Thanks for answering my questions.
Thank you. Before we take the next question, a reminder to all the participants to press star and one. The next question is from the line of Shailendra M. from Veba Financials. Please go ahead.
Hi. This is a follow-up question. I wanted to know, you know, this is kind of follow-up to your previous comments. In terms of inorganic growth, what kind of acquisitions you have done in last quarter, if any, and what is the pipeline looking like for next one or two quarters?
Last quarter, as I said that, there is no inorganic in the last quarter. The pipeline is long. We are looking forward that quarter two, quarter three, quarter four, we will start getting lot of inorganic numbers also apart from the organic numbers. We are very confident and hopeful that those inorganic deals will happen and then it will start reflecting in the numbers.
Just wanted to check, the acquisitions are attractive from our company's perspective, but is it also an attractive proposition from the seller's point of view?
Yes. As you know that, anybody will sell only when it is attractive to that person. There is a consistent, you can say arrangement with them also on that basis so that they will be in the industry only. That's the way we make the deal.
Okay. Thank you.
Thank you. The next question is from the line of Keshav from RakSan Investors.
Hi. Good evening, sir. Sir, I have questions on bandwidth. Do the costs have escalation clauses, and how often are they related?
Can you repeat that? Your one or two words was not audible.
Yeah. On your bandwidth costs, are there escalation clauses? Are they escalated per annum or?
On the cost side?
Yeah. Cost side. Yes.
As you know that, we are always saying that, your bandwidth will become commodity with the time and, the prices will go down. We negotiate hard with our vendors and, we usually get the discounts on what the rates are currently. That's the way we are doing it from last two to three years and we endeavor to continue on that way.
Okay. Pardon me for my ignorance, but I just wanted to understand how bandwidth is charged. Is it on a consumption basis or is it bundled? Like, for instance, you have home passes increasing X conversion. If you say we see an increase in conversions, does the bandwidth costs also go linearly up as in per user basis?
No, it is. See, the bandwidth utilization is dependent on the increase in the subscriber base and their bandwidth utilization and all. Yes, we do the deals with our vendors in such a way that it is the percentage, as a revenue percentage, it should go down in such a way. That's the way we do the deals with the bandwidth providers that, if one customer, we take more margin if the customer increases.
All right, sir. Thank you.
Thank you. A reminder to the participants to press star and one to ask a question. As there are no further questions, I would now like to hand the conference over to the management for closing comments.
Thank you all for joining the earnings call of GTPL Hathway for quarter one FY 2023, and we look forward to talk to you for the next year, next quarter results for the quarter two FY 2023. Be safe and healthy. Take care. Thanks a lot.
Thank you. On behalf of Emkay Global Financial Services, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.